Experienced California Oil, Gas & Real Estate Representation

Fewer wells drilled despite state’s continued dependence on oil

On Behalf of | May 4, 2018 | Uncategorized |

Owners of wells and real estate rich in minerals in California appear to have many advantages thanks to the state’s massive underground reservoirs of oil. The state’s economy and many of its individual and corporate residents have relied on the bounty that mining crude oil has provided. With the wealth of buried riches, many people may wonder why production is not increasing to meet the demand for gasoline.

In one of the largest oil producing locations in the state, San Joaquin Valley’s Midway-Sunset field, production has dropped by 100,000 barrels per day over the last 20 years. The problem is not a lack of oil. Instead, it stems from environmental regulations that force California refineries to ship oil from overseas rather than produce its own.

If the state were able to bring in oil from other states through pipelines, the cost would not be as high, but there are no pipelines. Not only are fewer new wells being drilled, many production companies are being forced to abandon areas still rich in crude oil, and state environmental regulations and local opposition are insisting on the dismantling of some wells that have been present for decades.

Environmental regulations from the state may cause mineral rights owners, corporations and others in the field problems over the right to drill where oil is present. Those who believe their rights have been violated may want to speak to an attorney.

Source: Bloomberg, “California Oil Dreams Fade as Iconic Beverly Hills Derrick Comes Down,” Robert Tuttle and Laura Blewitt, April 26, 2018